Tag: Medicare

Conservatives for Higher Taxes

Center for a Free Economy president Ryan Ellis writes in the Washington Examiner that President Trump “has caved to the socialists” by proposing to set the prices that Medicare pays for certain drugs at a percentage of the prices that foreign governments set for those drugs:

Unfortunately, rather than fighting the socialists, the president has decided to become one with them — at least when it comes to prescription drugs. After spending most of this year rightly condemning governments in Europe and elsewhere for ripping off Americans by imposing below-market price controls on drugs, Trump and [Secretary of Health and Human Services Alex] Azar basically surrendered to the price controls and announced we would be adopting them ourselves…

By letting the foreign price controls serve as a reference price control here, Trump has put us down the same path of scarcity and rationing all too often seen in the rest of the developed world.

The purpose of Trump’s proposal is indeed to reduce the prices Medicare pays for these drugs. Medicare currently pays much more for these drugs than government-run health systems in other nations.

Beyond that, Ellis’s oped crystallizes everything conservatives get wrong about drug pricing and Medicare purchasing in general. A few clarifications:

  1. No one knows what the “right” price is for any drug. We need market prices because they create incentives that naturally and always push prices in the right direction. 
  2. Medicare’s administered (read: ouiji-board) prices are indeed price controls, but not in the usual meaning of the term. They do not restrain prices anywhere but within the Medicare program.
  3. Medicare’s administered/controlled prices are not market prices, any more than other governments’ administered/controlled prices are market prices. 
  4. The Trump proposal would merely change the way Medicare comes up with the prices it pays for drugs. Those prices would not be any more “price-controlled” after the Trump proposal than they were before. They would just be lower–if the proposal achieves its stated goal, that is, which may or may not happen (more below).
  5. Conservatives who argue Medicare should not pay less than it currently does for drugs need to address the paradox inherent in their argument that, in order to restrain government and have a free economy, government must spend more. In order to fight socialism, taxes must be higher.
  6. One cannot import a price control. That’s not how they work. A government can either impose price controls on its own populace, or not. It cannot import the coercion another government exerts on its own citizens.

Ellis is correct when he writes, “Markets do a much better job reducing drug prices than government price controls do, and they do it while making prescription medicines widely available to patients, as opposed to rationed due to scarcity.” But the end result of these misunderstandings and misconceptions is that conservatives end up crowding out markets and/by opposing efforts to reduce government spending. This is why the Left believes, with justification, that when it comes to health care conservatives are just a bunch of cronyists.

Another irony: the more likely impact of Trump’s reference-pricing scheme is that prices in other nations would rise, which is exactly what Ellis says he wants.

Overcharged by Cato adjunct scholars Charlie Silver and David Hyman is the antidote to this strand of un-conservative conservative thinking. 

Why I Think Conservatives Have the Alfie Evans Case All Wrong

Conservatives are railing against dual decisions by the British government to prevent Alfie Evans’ parents from transporting him to Italy for further treatment, and to order Alfie’s doctors to withdrawal life support from Alfie, which they did, and which soon led to Alfie’s death. Conservatives are claiming this is what you get under socialized medicine: heartless government will override parental rights to pull the plug on your children. My thoughts on Alfie’s case are still tentative, but I think that’s a total misreading. The tragic case of Alfie Evans had almost nothing to do with socialized medicine. 

As hostile as libertarians are to government, even we believe government can legitimately order the withdrawal of life support, and prohibit parents from moving a child to obtain further treatment, when that treatment would fruitlessly prolong a child’s suffering – i.e., when further treatment would be akin to torture. In such cases, the government intervenes to protect the child’s rights. (British law frames the decision in terms of the “best interests” of the child, but it seems to me that language clouds the issue and thereby unnecessarily inflames passions.) 

There is no objectively right place to draw the line between cases in which the government should and should not intervene. But I don’t know anyone who thinks it never should. If anyone does make that argument, they’re just wrong. 

There is plenty of room to argue about whether British law and courts drew the line in the right place here. It did not appear Alfie was suffering, but doctors could not completely rule it out. They all agreed that further treatment was futile, though. Is it torture to provide futile treatment to a kid who likely can’t feel pain?

The only way socialized medicine might have something to do with Alfie’s case is that decades of socialized medicine might have shaped the values and attitudes of the elites who make the ultimate decision about where to draw that line. It is not crazy to think that the incentives the British National Health Service creates to provide less care, and the stiff-upper-lip attitudes that lead Britons to tolerate queues and other forms of explicit and implicit government rationing all for the Greater Good, might influence where the elites draw that line. But if the influence of the NHS leads British elites to be more likely to pull the plug on Alfie, that is not obviously or objectively wrong. 

Nor is it the only way socialized medicine might influence where elites draw the line. The U.S. Medicare program is a system of socialized medicine that imposes no constraints on medical spending or consumption. Decades of experience with it and similar socialized-medicine programs have created a pervasive belief among U.S. physicians and policymakers that more medicine is always better. (Spolier alert: it’s not.) So if U.S. conservatives want to make the argument that decades of socialized medicine have made Britain’s elites too willing to pull the plug on Alfie, they must also confront the possibility that decades of socialized medicine have made them too willing to tolerate the torture of children like Alfie.

I don’t know what the right answer was in Alfie’s case. I do know Alfie’s case is not an illustration of the failures of socialized medicine.

I also know that advocates of socialized medicine have exactly zero right to complain about the ignorance of some opponents of socialized medicine, because socialized medicine also socializes the cost of ignorance.

And I know one more thing: there’s a hug and a pint waiting for Alfie’s parents, Tom and Kate, in Washington, D.C.

Multiple Distinguished Health Care Practitioners Speak Out Against Misguided Opioid Policy

On March 30, Sally Satel, a psychiatrist specializing in substance abuse at Yale University School of Medicine, co-authored an article with addiction medicine specialist Stefan Kertesz of the University of Alabama Birmingham School of Medicine condemning the plans of the Center for Medicare and Medicaid Services to place limits on the amount of opioids Medicare patients can receive. The agency will decide in April if it will limit the number of opioids it will cover to 90 morphine milligram equivalents (MME) per day. Any opioids beyond that amount will not be paid for by Medicare. One year earlier, Dr. Kertesz made similar condemnations in a column for The Hill. While 90 MME is considered a high dose, they point out that many patients with chronic severe pain have required such doses or higher for prolonged periods of time to control their pain. Promoting the rapid reduction of opioid doses in such people will return many to a life of anguish and desperation.

CMS’s plan to limit opioid prescriptions mimics similar limitations put into effect in more than half of the states and is not evidence-based. These restrictions are rooted in the false narrative that the opioid overdose problem is mostly the result of doctors over-prescribing opioids to patients in pain, even though it is primarily the result of non-medical opioid users accessing drugs in the illicit market. Policymakers are implementing these restrictions based upon a flawed interpretation of opioid prescribing guidelines published by the Centers for Disease Control and Prevention in 2016.

Drs. Satel and Kertesz point out that research has yet to show a distinct correlation between the overdose rate and the dosages on which patients are maintained, and that the data show a majority of overdoses involve multiple drugs. (2016 data from New York City show 97 percent involved multiple drugs, and 46 percent of the time one of them was cocaine.)

Not only are the Medicare opioid reduction proposals without scientific foundation, but they run counter to the recommendations of CMS in its 2016 guidelines. As Dr. Kertesz stated in 2017:

“In its 7th recommendation, the CDC urged that care of patients already receiving opioids be based not on the number of milligrams, but on the balance of risks and benefits for that patient. That two major agencies have chosen to defy the CDC ignores lessons we should have learned from prior episodes in American medicine, where the appeal of management by easy numbers overwhelmed patient-centered considerations.”

In an effort to dissuade the agency, Dr. Kertesz sent a letter to CMS in early March signed by 220 health professionals, including eight who had official roles in formulating the 2016 CDC guidelines. The letter called attention to the flaws in the proposal and to its great potential to cause unintentional harm. CMS will render its verdict as early as today.

Until policymakers cast off their misguided notions about the forces behind the overdose crisis, patients will suffer needlessly and overdose rates will continue to climb. 

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14 Questions for Trump HHS Nominee Alex Azar

President Trump has nominated Alex Azar to be the next Secretary of Health and Human Services. Azar will appear tomorrow for questioning before (and sermonizing by) members of the Senate’s Health, Education, Labor, and Pensions Committee.

Here are 14 questions I would ask Azar at his confirmation hearings.

  1. Is Congress a small business as that term is defined in the Affordable Care Act?
  2. Colette Briggs is a four-year-old girl with aggressive leukemia who is about to lose coverage for the one hospital within a hundred miles that can deliver her chemotherapy. She’s losing that coverage because insurance companies are fleeing the Exchanges. What do you plan to do, what can HHS do, about this problem?
  3. What will you do to prevent drug manufacturers from using the regulatory process to corner the market on certain drugs so they can gouge consumers and taxpayers?
  4. HHS already publishes data on Exchange premiums and insurer choice. Will you commit to publishing a review of the growing body of research showing Exchange coverage is getting worse for many expensive illnesses?
  5. Does HHS have an obligation to encourage young, healthy Americans to pay the hidden taxes contained in the ACA’s rising health insurance premiums?
  6. How will HHS increase its efforts to educate Americans about all their options for avoiding the mandate penalty?
  7. Short-term health insurance plans are an affordable alternative to increasingly costly Exchange coverage. Will you reinstate the 12-month policy term that existed before this year, and allow short-term plans to be guaranteed-renewable?
  8. The previous administration issued rules making it generally unlawful to purchase or switch Exchange plans for nine months out of the year. The Trump administration has restricted this freedom even more, making it generally unlawful for ten and a half months out of the year. Should consumers be free to purchase and switch health plans when they choose, just like any other product?
  9. Will you require insurance companies to repay the “reinsurance” subsidies the Government Accountability Office found the Obama administration illegally diverted to them?
  10. Will you press the Food and Drug Administration to allow the sale of birth-control pills over the counter, without a prescription?
  11. Medicare, Medicaid, and ObamaCare attempt to pay insurance companies according to the cost of each individual enrollee. If those complicated formulas really work, should government just give the money to the enrollees and let them control their health insurance and health care decisions?
  12. Is Obamacare’s Independent Payment Advisory Board constitutional? 

  13. Should seniors be able to opt out of Medicare without losing Social Security benefits?
  14. Will you end government encouragement of “abuse-deterrent” opioids, which have not reduced overdose deaths and are borderline unethical because some are literally formulated to hurt people?

Six Sobering Charts about America’s Grim Future from CBO’s New Report on the Long-Run Fiscal Outlook

I sometimes feel like a broken record about entitlement programs. How many times, after all, can I point out that America is on a path to become a decrepit European-style welfare state because of a combination of demographic changes and poorly designed entitlement programs?

But I can’t help myself. I feel like I’m watching a surreal version of Titanic where the captain and crew know in advance that the ship will hit the iceberg, yet they’re still allowing passengers to board and still planning the same route. And in this dystopian version of the movie, the tickets actually warn the passengers that tragedy will strike, but most of them don’t bother to read the fine print because they are distracted by the promise of fancy buffets and free drinks.

We now have the book version of this grim movie. It’s called The 2017 Long-Term Budget Outlook and it was just released today by the Congressional Budget Office.

If you’re a fiscal policy wonk, it’s an exciting publication. If you’re a normal human being, it’s a turgid collection of depressing data.

But maybe, just maybe, the data is so depressing that both the electorate and politicians will wake up and realize something needs to change.

I’ve selected six charts and images from the new CBO report, all of which highlight America’s grim fiscal future.

The first chart simply shows where we are right now and where we will be in 30 years if policy is left on autopilot. The most important takeaway is that the burden of government spending is going to increase significantly.

Do Opioid Restrictions Reduce Opioid Poisonings?

In a recent working paper, economists Thomas Buchmueller and Colleen Cary find that one particular kind of restriction does reduce opioid misuse among Medicare beneficiaries:

The misuse of prescription opioids has become a serious epidemic in the US. In response, states have implemented Prescription Drug Monitoring Programs (PDMPs), which record a patient’s opioid prescribing history. While few providers participated in early systems, states have recently begun to require providers to access the PDMP under certain circumstances. We find that “must access” PDMPs significantly reduce measures of misuse in Medicare Part D.

Yet, they also find

no statistically significant effect [of must access PDMP’s] on a key medical outcome: opioid poisoning incidents.

How is this possible?

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ObamaCare: Not Promoting Quality Care As Planned

At The Health Care Blog, Jeff Goldsmith and Bruce Henderson of Navigant Healthcare offer a grim assessment of ObamaCare’s performance that is worth quoting at length:

The historic health reform law passed by Congress and signed by President Obama in March, 2010 was widely expected to catalyze a shift in healthcare payment from “volume to value” through multiple policy changes. The Affordable Care Act’s new health exchanges were going to double or triple the individual health insurance market, channeling tens of millions of new lives into new “narrow network” insurance products expected to evolve rapidly into full risk contracts.

In addition, the Medicare Accountable Care Organization (ACO) program created by ACA would succeed in reducing costs and quickly scale up to cover the entire non-Medicare Advantage population of beneficiaries (currently about 70% of current enrollees) and transition provider payment from one-sided to global/population based risk. Finally, seeking to avoid the looming “Cadillac tax” created by ACA, larger employers would convert their group health plans to defined contribution models to cap their health cost liability, and channel tens of millions of their employees into private exchanges which would, in turn, push them into at-risk narrow networks organized around specific provider systems. 

Three Surprising Developments
Well, guess what? It is entirely possible that none of these things may actually come to pass or at least not to the degree and pace predicted. At the end of 2015, a grand total of 8.8 million people had actually paid the premiums for public exchange products, far short of the expected 21 million lives for 2016. As few as half this number may have been previously uninsured. It remains to be seen how many of the 12.7 million who enrolled in 2016’s enrollment cycle will actually pay their premiums, but the likely answer is around ten million. Public exchange enrollment has been a disappointment thus far, largely because the plans have been unattractive to those not eligible for federal subsidy. 

Moreover, even though insurers obtained deep discounts from frightened providers for the new narrow network exchange products (70% of exchange products were narrow networks), the discounts weren’t deep enough to cover the higher costs of the expensive new enrollees who signed up. Both newly launched CO-OP plans created by ACA and experienced large carriers like United and Anthem were swamped in poor insurance risks, and lost hundreds of millions on their exchange lives. As for the shifting of risk, it looks like 90% plus of these new contracts were one-sided risk only, shadowing and paying providers on the basis of fee-for-service, with bonuses for those who cut costs below spending targets. Only 10% actually penalized providers for overspending their targets.

The Medicare Accountable Care Organization/Medicare Shared Savings Program, advertised as a bold departure from conventional Medicare payment policy, has been the biggest disappointment among the raft of CMS Innovation Center initiatives. ACO/MSSP enrollment appears to have topped out at 8.3 million of Medicare’s 55 million beneficiaries. The first wave, the Pioneer ACOs, lost three-fourths of their 32 original participating organizations, including successful managed care players like HealthCare Partners, Sharp Healthcare, and Presbyterian Healthcare of New Mexico and others. The second, much larger wave of regular MSSP ACO participants lost one third of their renewal cohort. Only about one-quarter of ACO/MSSP participants generated bonuses, and those bonuses were highly concentrated in a relative handful of successful participants. 

Of the 477 Medicare ACO’s, a grand total of 52, or 11%, have downside risk, crudely analogous to capitation. As of last fall, CMS acknowledged that factoring in the 40% of ACO/MSSP members who exceeded their spending targets and the costs of the bonuses paid to the ACOs who met them, the ACO/MSSP programs have yet to generate black ink for the federal budget. And this does not count the billions care systems have spent in setting up and running their ACOs. It is extremely unlikely that the Medicare ACO program will be made mandatory, or voluntarily grow to replace DRGs and the Medicare Part B fee schedule. 

And the Cadillac Tax, that 40% tax imposed by ACA on high cost employee benefit plans, a potentially transformative event in the large group health insurance market, which was scheduled to be levied in 2018, was “postponed” for two years (to 2020) by an overwhelming Congressional vote. In the Senate, a 90-10 bipartisan majority actually voted to kill the tax outright, strongly suggesting that strong opposition from unions and large employers will prevent the tax from ever being levied. Presumptive Democratic nominee Hillary Clinton has announced her support for killing the tax. So the expected transformative event in the large group market has proven too heavy a lift for the political system. 

As a result, the enrollment of large group workers in private health exchanges, the intended off-ramp for employers with Cadillac tax problems, has arrested at about 8 million, one-fifth of a recent forecast of 40 million lives by 2018. Thus, the conversion of the enormous large group market members to narrow network products seems unlikely to happen. As a recent New York Times investigation revealed, the reports of the demise of traditional group health insurance coverage (based on broad network PPO models) have been greatly exaggerated.

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